The Law Society of New South Wales v Teps [2018] NSWCATOD 163

In this matter, Greg Walsh acted for Michael Teys, who was the subject of an application by the Law Society of NSW, that his name be removed from the roll of local lawyers. The matter was heard before K. O’Connor AM, ADCJ. [1]

The Law Society’s application was based upon allegations that the Respondent had:

  • Failed to remit monies to the Australia Taxation Office (ATO); o Failed to pay superannuation entitlements; and
  • Breach of s.260 Legal Profession Act

The Tribunal in its judgment set out the history of the matter.

The Respondent was the Shareholder of Teys Services Pty Ltd and he and his former wife, Michelle Anne Teys, were Directors of that Company. Between 25 March 2014 and 3 April 2014, the Respondent caused the transfer in the sun $130,300 to be made from various company ban accounts into the law practice’s trust account and over the trust ledger in the name of “funds held in trust for client, Teys, Michael”. By 3 April 2014, the Respondent had caused a total of $72,991.78 to be paid from the ledger account. This was for payroll or expenses.

In April 2014, the Respondent caused the sum of $58,208.22 to be paid from the ledger account to the new law practice for payments for essential services on its commencement. On 9 April 2014, Mr Roland Dean-Wilcox, of Insolvency Solutions, was appointed Voluntary Administrator of the Company.

On 9 April 2014 and 12 May 2014, the Respondent prepared a report as to affairs (RATA). This showed a deficiency of $867,467 including:

  • A liability to the ATO of $546,697.11;
  • A liability to employees of $155,864.42.

During the financial year ending June 2013, the Respondent caused the Company to pay dividends to Teys Services Pty Ltd in the sum of $309,167. In the same period, the Respondent caused the Company to forward the sum of $210,000 either to Ms Michell Teys or as a loan to Teys Services as dividends. The Respondent also caused the Company to pay dividends to Teys Services in the sum of $152,530. In the financial year ending 30 June 2013, the Respondent drew $280,333 in salary.

The Respondent admitted that he had failed to remit monies to the ATO and pay superannuation entitlements and breached s.260 of the Legal Profession Act.

The Respondent relied upon a number of affidavits and gave evidence to the Tribunal.

The Respondent’s case was that he had suffered from longstanding bipolar disorder. His marriage had broken down in circumstances of considerable stressors namely that he had come out as a gay man and this caused a considerable degree of stress and anxiety to him. This aggravated his bipolar 2 disorder.

The Respondent had sought to obtain advice from an experienced and confident expert and reviewed the law practice’s operations and took steps to reduce overheads. He had introduced capital for the legal practice from his mother, Mr and Mrs Beem and Mr Knox.

Greg Walsh sought on the Respondent’s behalf to distinguish the circumstances of the Respondent’s case for those relied upon by the Applicant including that of Council of The Law Society of New South Wales v Wehbe [2018] NSWCATOD 14.

It was further contended that the Respondent did not act dishonestly and Greg Walsh relied upon the observations of Beech-Jones Barakat v The Law Society of New South Wales [2014] NSWSC 773.

The Tribunal found the Respondent’s conduct constituted professional misconduct and that he was not a fit and proper person to remain on the roll of local lawyers. The Tribunal was satisfied that the Respondent’s conduct in the 2012 financial year evidences that he preferred the interest of himself and his family over his statutory obligations including the obligation to pay tax. The Tribunal was also satisfied that the Respondent breached section 260 of the Legal Profession Act

  1. K. O’Connor was replaced after the matter was initially the subject of application due to ill health.